Asia stocks decline in thin holiday trade; Nikkei dips 0.45%

Investing.com – Asian stock markets declined in thin year-end trade on Tuesday, with most markets across Asia closed for holidays, while shares in Japan slumped after the Bank of Japan warned about possible downside risks from the European debt crisis.

During late Asian trade, Japan’s Nikkei 225 Index retreated 0.45%. Trading volumes were low as several markets remained close, including Hong Kong, Australia and New Zealand.

The Nikkei fell below its 25-day moving average after minutes from the BoJ’s most recent policy meeting warned that the world's third largest economy faces "significant downside risks" due to Europe's ongoing debt crisis.

Lingering concerns over the possibility of mass credit ratings downgrades for euro zone countries also dampened sentiment, with Standard & Poor's yet to announce if it will cut ratings on any of the 15 countries it has on credit watch negative.

Two independent European government sources said Friday that S&P was not expected to release its verdict on euro zone debt ratings until January.  

Shares in the financial sector were mixed, with investment banks Nomura Holdings and Daiwa Securities gaining 0.4% apiece, while Sumitomo Mitsui Financial Group saw shares decline 0.65%.

Shares in Japanese exporters were also mixed, amid the uncertain global outlook. Automakers Honda and Nissan fell 0.6% and 1.7% respectively, while shares in Canon inched up 0.3%.

Meanwhile, consumer electronics giant Sony saw shares dip 0.5% after it announced that it was selling its 50-50 joint venture for liquid-crystal displays with South Korea’s Samsung Electronics for approximately USD940 million.

Looking ahead, the outlook for European stock markets was modestly upbeat. Investors were eyeing Italian three and ten-year bond auctions this week. The yield on Italy’s ten-year bonds topped the critical 7% threshold on Friday, adding to concerns over the country’s handling of its financial troubles.  

The EURO STOXX 50 futures pointed to a small gain of 0.1%, France’s CAC 40 futures added 0.4%, Germany's DAX futures pointed to an increase of 0.35%, while the U.K.’s FTSE 100 was to remain closed for a holiday.

Later in the day, the U.S. was to publish industry data on house price inflation, as well as a report on consumer confidence and manufacturing activity in Richmond.